Deng Chao is the CEO of a cryptocurrency investment company HashKey Capital and Director of HashKey Singapore, which includes HashKey OTC and HashKey Wealth.
Digital currencies remain the first thing that comes to mind for many people when they think of blockchain. But in reality, the technology has evolved significantly and is now widely recognized for its ability to power a wide range of applications across many industries. And while financial applications will likely remain a key use case for distributed ledger technology (DLT), there are several key areas of innovation to watch.
Most people would agree that AI has been in the headlines lately. But blockchain-based projects continue to attract significant investment, largely because investors believe in blockchain. transformer Potential. A study by management consultancy Agile Dynamics, for example, suggests that blockchain use in emerging markets could boost global GDP by $2.1 trillion by 2030.
If this prediction proves correct, it will be thanks to the innovative applications that have come to market in recent years, as well as those currently in development. Here are five use cases that are shaping the future of blockchain technology and investment.
1. Decentralized Identity
Decentralized identity gives control over personal data back to individuals. It allows people to create and manage identities or profiles independently without relying on a centralized authority like Google or Meta.
Concerns about internet privacy are here to stay, and many are turning to decentralized identity to protect users’ personal information in a world of endless data collection.
2. Layer 2 Solutions
Scalability has long been considered a challenge for blockchain to achieve wider adoption. Layer 2 (L2) solutions address this need by providing faster, cheaper, and more efficient transactions while maintaining the security of the underlying network.
The L2 landscape is constantly expanding. Generic L2s have been launching their mainnets and completing TGEs one after another. The most notable of these is zkRollup, which, alongside zkSync, taiko, and others, marks the gradual maturation of the generic L2 sector. At the same time, L2 networks for specific ecosystems, such as Base, have also gained momentum since their launch last year, as their ecosystems are rapidly expanding.
Bitcoin’s Layer 2 networks and sidechains have also attracted significant flows this year, with total value locked (TVL) recently surpassing $2 billion.
These developments have fueled rapid growth in projects providing the tooling infrastructure needed to launch and operate L2 networks.
3. Institutional finance
Institutional investors have continued to increase their exposure to blockchain, with many traditional players belatedly recognizing the benefits of DLT, including transparency, security, and efficiency. Many projects aim to facilitate the transition of financial institutions to Web3, by offering cryptocurrency trading, financing, and custody services to institutions.
4. Decentralized exchanges
Decentralized exchanges (DEXs) are the lifeblood of decentralized finance (DeFi), having effectively eliminated the need for intermediaries in cryptocurrency trading. While they lack the liquidity of their centralized counterparts, many platforms have gained popularity due to their low fees, fast settlement times, and strong privacy protections.
The DEX market recently hit a milestone, with March DEX volume hitting its highest ever record at $268 billion, surpassing its previous all-time high.
With over 820 DEXs currently in operation, features constantly improving, and more and more users on-chain, decentralized exchanges are an area of blockchain technology to watch.
5. Internet of Things/DePIN
The convergence of blockchain and the Internet of Things (IoT) opens up new possibilities for a decentralized machine economy. Its decentralized and incentivized form is what we now call DePIN (Decentralized Physical Infrastructure Network). The projects leading this movement combine blockchain, open hardware, and off-chain computing to connect billions of devices and decentralized applications (dApps) across the physical and digital realms.
Comprised of an EVM-compatible L1 blockchain, off-chain compute middleware, and open hardware, DePIN enables machines, humans, businesses, and dApps to interact with trust and privacy, paving the way for a future where IoT can reach its full potential without compromising personal security.
Whether it’s decentralized identity, L2s, DEXs, IoT and DePINs or other innovations, the blockchain landscape is poised to continue to capture hearts and minds in the medium to long term. The appeal is broad: both individuals and institutional investors are seduced by the possibilities of Web3.
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